In this webinar, we featured two pioneers in the direct-to-consumer retail space. Michael Dixon from Desray Fashions and Justin Blake of Silvery shared their unique insights into how they built their successful businesses.
Back in August, Aspen announced an agreement with the Serum Institute of India that would allow Aspen to manufacture, market and distribute four routine vaccines in Africa under license from Serum.
Before you wonder about whether this is a Covid product long after Covid has gone away, you can feel better about the fact that these are Pneumococcal, Rotavirus, Polyvalent Meningococcal and Hexavalent vaccines.
I’m no doctor, but ctrl-F “Covid” in the announcement yields no results, so that’s good news.
To help fund this 10-year deal with Serum, Aspen had been negotiating for funding with the Bill & Melinda Gates Foundation and the Coalition for Epidemic Preparedness Innovations (CEPI).
The exciting news is that $30 million in funding will be received ($15 million from each of those parties), which supports this initiative and creating regional vaccine manufacturing capacity that would put Africa in a better position going forward for future public health emergencies.
Ellies has released a trading statement for the six months ended October. The headline loss per share is expected to be between -4.17 cents and -4.99 cents, which gives an interesting range vs. the loss of -4.36 cents in the comparable period.
The restructure process has had an impact of R18 million, which equates to -2.24 cents per share. This suggests that things are looking better at operational level, albeit still a loss-making reality.
This is confirmed by the further commentary, which notes revenue up by 5.6% and gross profit marginally higher than the comparable period. Operating costs (excluding retrenchment costs) have been contained below inflation.
Ellies has signed a term sheet with its bankers to restructure the working capital facilities. There are other negotiations to “support the business” in areas of substantial growth for products and services, which probably means the introduction of strategic partners – we can’t be sure until any proper details are announced though.
Interim results are expected to be released on 14 December.
The share price has been ugly this year, losing half its value in largely one-way traffic:
NB: this is not an increase to the offer price for Royal Bafokeng Platinum. Instead, Northam Platinum is increasing the cash element of the offer and reducing the share-based element accordingly.
The overall impact is that the cash portion of the offer has increased from R10 billion to R17 billion. Expressed on a per-share basis, the cash consideration is now between R92.48 and R172.70 per share, depending on the level of acceptances.
The total offer price is R172.70, which is unchanged as highlighted above.
The trick here is that if Impala Platinum doesn’t accept the offer for its current shareholding in the company of 40.71%, then all other shareholders that accept would be paid R172.70 in cash.
Northam is trying hard to outfox Impala Platinum in this deal and a greater cash component is another step in that direction.
PBT Group is a successful tech consulting company that should be running a tight balance sheet, as this is essentially a management consulting model that focuses on selling time.
Despite this, the need to have the right empowerment credentials is a reality in the South African business landscape, so investors have been forgiving of a preference share funding structure that saw PBT Group providing funding to Yonex Investments (a B-BBEE investment entity).
In a smart move, PBT Group has managed to offload this preference share to Sanlam Investment Management for R53.3 million. This is a perfect example of capital allocation discipline, as PBT Group should be chasing a return on capital that is much higher than the yield on the preference share. In contrast, Sanlam Investment Management is looking for yield instruments that offer diversified exposure.
In other words, the deal makes sense for all involved, as Sanlam is a far better owner of these preference shares.
Prior to the disposal, PBT will receive a dividend of R1.4 million on the preference shares. A special distribution of R31.5 million will be paid to PBT shareholders after this deal closes. If you’re wondering where the rest of the money went, it’s important to note that a prior special dividend was higher than the value of non-core asset disposals that had been achieved by that time. There’s effectively a catch-up process underway here.
Importantly, PBT Group still holds R133.1 million in non-core assets. With a market cap of under R1 billion, that’s a substantial special dividend if PBT can get the remaining assets sold.
In an important step for Massmart’s balance sheet, Shoprite has been given the green light to acquire most of the stores that were part of the initial proposed transaction to acquire the heavily loss-making cash and carry business from Massmart.
The competition authorities determined that 15 stores should be excluded from the deal, so Massmart will need to try and sell them off separately.
Shoprite is allowed to acquire 42 Cambridge Food and Rhino Cash and Carry stores, two Fruitspot facilities, the Massfresh Meat business and 12 Masscash Cash and Carry stores.
The effective date of the transaction is 9 January 2023.
I remain a bit skeptical of this deal from a Shoprite perspective. The stores will obviously be renovated and rebranded as Shoprite (and probably Usave) stores, so this was really a process of just securing the sites. Still, it seems like an expensive exercise just for that, as the stores would’ve likely gone bankrupt anyway and the space would’ve become available for “free” from a Shoprite perspective.
Just when you thought South African consumers had become so debt-averse that this trend would carry on ad infinitum, lo and behold Lewis Stores made abundantly clear that their customers have a preference for credit over cash once more.
In the latest interim results from Lewis to end September 2022, there was a distinct change in the composition of cash:credit sales. From being nearer 50:50 cash:credit, the interim 2023 figures saw a big jump in credit sales to 56.5%:
And the latest consumer confidence indicator from the Bureau for Economic Research in Stellenbosch also suggests that consumers became more confident in the final quarter of 2022:
“The FNB/BER Consumer Confidence Index (CCI) recovered from -20 to -8 index points during the fourth quarter of 2022. Although the index remains in weak terrain relative to its long-term average, it has regained all the ground lost during the first half of 2022. The rebound in consumer sentiment shows an improved willingness to spend among consumers, but consumers’ ability to spend would also need to improve in order to translate into a significant increase in consumption.”
In other words, what the BER is suggesting is that, provided consumers have the wherewithal to spend, they will now be more inclined to do so.
This is not to suggest for a moment that Lewis or any other credit retailer for that matter is about to embark on a program of reckless credit-granting. Far from it, in fact. The credit application decline rate at Lewis improved to 35.8% (previous year 39.1%). Over the years, Lewis and others have learned a lot more about their customers’ spending patterns and have adopted very conservative credit-granting procedures. And for quite some time, South African consumers generally have expressed a preference for cash purchases over credit, as household debt to disposable income has declined progressively. Over the past thirteen years, household debt to disposable income has declined from 85% to nearer 65%.
Thus there is probably some capacity for consumers to take on extra debt, provided they are comfortable in their ability to repay it.
The statistics from the National Credit Regulator (NCR) are seriously lagged – the Q3 figures will only be available by early January – and so it’s not possible to draw any high-level conclusions about consumers’ willingness and/or ability to take on more credit at this point in time.
This comes as South African GDP growth surprised on the upside last week, with Q3 growth beating all estimates, coming in at 4.1% year-on-year and 1.6% quarter on quarter. Admittedly, the figures were helped by a bumper agricultural harvest coupled with a low base of comparison in Q2 . But nevertheless it’s a good outcome and suggests that SA won’t enter recession next year like many of its developed economy trading partners. Obviously the high incidence of rotational power cuts (loadshedding in Eskom-speak) may well dull GP growth in Q4 but across the spectrum, consumers and industry are making plans to combat loadshedding.
But we have to be realistic about the impact of higher credit sales. There can be no doubt that in a “normal” economy, furniture & appliance retailers much prefer credit sales to cash sales. It reminds me of a comment that JD Group CFO Gerard Volkl made at a presentation to the effect that “if we could just find a way of offering consumer finance without having to worry about this pesky furniture, it would be so much easier.”
Lewis CEO Johan Enslin pointed out at the results presentation that a credit sale is, on average, four times more profitable than a cash sale, even allowing for the fact that the group has to wait many months for the proceeds to arrive. This is not surprising, considering that the maximum interest rate allowed under the National Credit Act is the repo rate plus 21%.
Up until now, consumers have been wary of taking on more debt and understandably so at these kind of interest rates.
So, provided the retailer is happy that the consumer can afford to take on more debt and the consumer is happy to assume more debt, there does appear to be a bit of capacity for improving retail sales growth, even in a rising interest rate environment.
In this week’s episode of Ghost Wrap, we cover:
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Listen to the podcast below:
Anglo American is an interesting, complicated group that has exposure to a variety of commodities including PGMs, iron ore, nickel and copper. Don’t forget that De Beers (the diamond giant) is in there as well. The management team talks about the group being a “resilient business through the cycle” – a clear nod to diversification.
In the latest update, Anglo American has advised that production should be down around 3% this year, with unit costs up by 16%. That’s an unhappy story as input cost pressures combine with production decreases to create a nasty outcome.
The situation should improve in 2023, with production expected to increase by 5% and unit costs expected to increase by only 3%. Capital expenditure is anticipated to be around $0.8 billion higher than in 2022 as the Woodsmith project picks up.
In 2024, production is expected to increase by 5% and capex would return to current levels. The expectation for 2025 is flat production (i.e. similar to 2024) and ditto for capex.
Woodsmith is the group’s next major greenfield project after Quellaveco, bringing a diversified source of income in the production of Poly4, the low carbon fertiliser. Speaking of copper project Quellaveco, that operation increases Anglo’s global production base by 10% and is expected to be highly margin accretive over the next decade.
Other than the immediate pressures, the group sounds bullish about its prospects.
At Anglo American Platinum, the good news for 2022 is that refined PGM production is 3.8 million ounces, smack in the middle of the guided range of 3.7 million to 3.9 million. The bad news is that because of inflationary pressures, the unit cost of R15,300 per ounce is higher than the guidance of R14,000 to R15,000.
There is a build up in work-in-progress inventory because of loadshedding and the delay in the Polokwane smelter rebuild. This inventory will be refined in 2023, which will give some benefit to the next financial year and 2024 as well.
Looking at the medium-term guidance (2023 – 2025), the business is clearly under pressure. Drilling initiatives have reflected a reduction in higher-grade ore volumes at Mogalakwena. There are also lower volumes expected from Amandelbult, with infrastructure closures, challenging geological ground conditions and the pending end to the life-of-mine of the current opencast operations. The company also expects to receive lower purchase-of-concentrate volumes than previously anticipated.
The production forecast for 2023 and 2024 is 3.6 million to 4.0 million ounces. It was previously between 3.8 and 4.2 million ounces for 2023 and between 4.1 and 4.5 million ounces for 2024, so this is a significant drop. It gets worse in 2025 (a new forecast), with production estimated at 3.3 million to 3.7 million ounces.
With ongoing inflationary pressures on top of production challenges, the unit cost guidance for 2023 is between R16,000 and R17,800 per PGM ounce.
This isn’t great news for shareholders at all, with a 7.3% drop in the share price on Friday as a result.
The updates on each underlying company don’t go into much detail, but there’s enough to get a good sense of how the portfolio is doing.
African Rainbow Capital Investments (ARC) is split into a diversified investments portfolio and a financial services portfolio, so I’ll stick to that approach for this update.
Before going into the portfolio updates, take note that the lower management and performance fees for the fund were approved by shareholders in November. Although I still don’t like the structure, it’s better than it used to be.
Diversified investments
The only comment on rain is that the business is performing well and the additional spectrum is expected to positively impact the valuation.
At phosphate business Kropz, the Elandsfontein phosphate plant has suffered several setbacks to its commissioning. This caused operational cash shortfalls and ARC increased the convertible loan facility by R550 million as a result, of which R247.5 million has been drawn.
The last of the Afrimat stake was sold in November, generating an internal rate of return (IRR) of 21.72% on that investment. Another disposal of a public company was the 3.2% stake in Capital Appreciation, with an IRR of 12%.
Most of the assets in the ARC Services group of company are being disposed of in line with the carrying value of R291 million.
Bluespec is performing in line with expectations and meeting profit targets. Weelee, the online vehicle bidding platform, is also growing in line with the business plan.
The disposal of Humanstate and Payprop SA for R496 million has been concluded. The IRR on disposal was 20%, excluding any earn-out structures. There is the potential to receive another R52 million over 30 months.
Fledge Capital is in an acquisition phase, having sold its remaining investment in WeBuyCars earlier in the year.
Linebooker is enjoying strong month-on-month volume growth in the online booking platform and the management team is exploring options beyond South Africa.
Financial services
Alexforbes is a publicly listed company and ARC doesn’t go into any details beyond what the company already discloses in its own reporting.
TymeBank always gets a lot of focus and deservedly so, as this is a significant and interesting investment. October saw 228,000 new customers onboarded, a record month for the bank and vastly higher than 130,000 to 140,000 customers per month in the first half of 2022. With the acquisition of Retail Capital, TymeBank is looking to enhance its offering to its business banking clients. Retail Capital is a large SME funder that has disbursed over R5.5 billion to more than 43,000 business owners in the past decade. Notably, Tyme Global has launched GOtyme in the Phillipines.
Crossfin has increased the number of merchants utilising its services and has achieved revenue and EBITDA growth on a year-on-year basis.
In Sanlam, the deal with Absa Investments to create one of South Africa’s largest black-owned asset managers has been concluded. Also related to Sanlam, ARC highlights that Sanlam is looking to take a controlling stake in Afrocentric.
There’s been no news for a while on the insurgency in Mozambique that got dangerously close to Gemfields’ Montepuez ruby mine. The army was sent in to stabilise the situation and it seems to have worked. Although the risks aren’t gone by any means, the market seems to have relaxed after seeing support from government to protect the mine.
In the latest ruby auction, the company achieved auction revenues of $66.8 million after selling 94% of the lots offered for sale. Over the full year, the 2021 auction revenue record for Montepuez rubies ($147.4 million) was smashed with a performance of $166.7 million.
Looking at the broader group (i.e. including the Kagem emerald mine in Zambia), Gemfields’ auction revenues of $316 million have set a new annual record, up 32% from 2021.
It’s been a year of immense volatility and huge opportunities for traders:
Italtile has updated the market on its sales for the five months to November.
It’s important to understand that the group has manufacturing operations (Ceramic Industries and Ezee Tile Adhesive Manufacturers) as well as retail operations (CTM, Italtile Retail, TopT and U-Light). The integrated supply chain import businesses are Cedar Point, International Tap Distributors and Distribution Centre.
The businesses continue to face serious macroeconomic headwinds. Under considerable pressure from interest rates and inflation, consumers are deferring or scaling down on renovations and new build projects. To make it worse, loadshedding is causing a lot of pain for Italtile in the manufacturing division.
Although the update doesn’t give the percentage increases in selling price inflation, we can safely assume that a 2.3% increase in sales in the Retail division means that volumes are down. This is the case where inflation is higher than the percentage increase in sales. I have the same concern about the integrated supply chain businesses, which are up just 3%.
The Manufacturing division is up 7.8%, a performance that is “primarily due to price increases” (which implies some volume growth at least).
The company expects difficult conditions to persist for the rest of the year and no specific earnings guidance has been given due to the uncertain operating conditions.
After a tricky first half of the year for Kumba, matters were made more difficult by a two-week strike at Transnet in October. This has a negative effect on throughput, which in turn leads to a build-up of iron ore stockpiles at the mines.
Something has to give somewhere, in this case in the form of lower production due to the lack of storage space. Thankfully, the group has managed to maintain its unit cost guidance for the year despite lower production.
For 2023, production is expected to be 35 – 37Mt, down from 39 – 41Mt. The unit cost is $44 per tonne, achieved through lower anticipated diesel prices and currency depreciation. Of course, if the macroeconomic picture works out differently, then things could get ugly.
There is some light at the end of this railway tunnel. Kumba highlights various steps being taken by Transnet to improve matters, including a major maintenance programme, an extra set of trains, the removal of speed restrictions and the implementation of weather-related mitigations. This supports a production outlook of 37 – 39Mt in 2024 and 39 – 41Mt in 2025.
Still, that’s well down from the 41 – 43Mt previously guided for 2024. Our infrastructure challenges are throttling our economy.
In an explosive recent piece by Ann Crotty of the Financial Mail, a number of allegations were put forward about governance at Spar. It also highlighted the legal proceedings by the Giannacopoulous Group, which owns 45 Spar stores.
In this edition of My Big Fat Greek Dispute, the article sets out a long-standing dispute between Spar and the Giannacopoulous Group with respect to its guild membership, a prerequisite for owning a Spar store (you need to remember that they are franchises).
A very embarrassing court judgement is quoted, in which high court judge Judy Kollapen talked about a “spectacular failure on the part of the Spar Group” – not what shareholders (or others for that matter) want to read.
The family is now claiming R2.1 billion in damages. That’s a lot. There is also a criminal proceeding underway, with the backing of AfriForum. This is getting very ugly, very quickly.
The governance concerns go deeper than just a legal dispute that hasn’t been given much attention in the company disclosure. There are allegations of fictitious loans and major question marks around Graham O’Connor’s independence as chairman. He was the previous CEO and his family appears to have various commercial interests with Spar.
I won’t reveal more of Ann Crotty’s excellent work in Financial Mail. Being a subscriber to the publication is a worthwhile investment and you can read it there (along with my weekly column in the magazine if you so desire).
On Friday, the retailer responded to the media allegations, the summary being as follows:
Amidst the allegations, O’Connor has stepped down as chairperson of the board and will remain a director. Andrew Waller, the current lead independent director, will serve as interim chairperson.
The share price tells the story here:
In this interactive session, attendees had some really interesting questions that included a few that I needed to answer about equity strategies.
It was a brilliant webinar that I highly recommend making time to watch:
To learn more about how TreasuryONE can help your business navigate these conditions, visit their website.
I never cease to be amazed by British American Tobacco’s public relations onslaught. The website looks like a tech company or a special needs school that promises a brighter future:
Of course, this is a cigarette company that is trying hard to figure out how else to make a profit. Because ESG index inclusion is all about intent and meeting rules, rather than a company’s actual value to society, British American Tobacco is a favourite. This is why most of the ESG industry is just window dressing of the worst kind.
The New Category business (vapes etc.) has 21.5 million customers and is still loss-making, with a plan to be profitable by 2025 when the target of £5 billion revenue is met.
The cigarettes make the money, though industry volumes are under pressure because of macroeconomic factors and post-Covid normalisation of consumption. With a core business that is essentially a sunset industry, there’s a major focus on cost savings (£1.5 billion annualised savings by the end of 2022) and pricing initiatives to recover inflationary pressures.
Investors treat British American Tobacco as a cash cow. It manages to grow revenue slightly each year and converts over 90% of adjusted profit from operations into cash.
With a market cap of R1.75 trillion, British American Tobacco is an absolute monster and is used as a defensive stock because the customers are, shall we say, rather sticky. Here’s what that looks like in a tricky market:
The Rebosis business rescue plan was supposed to be released on 1 December, but the practitioners have requested an extension to 20 January. That’s the boring news.
The financial statements are a sticking point, as the annual financials for the year ended August can’t be released until the auditors can make a reliable assessment of the company’s ability to continue as a going concern. That isn’t going to happen until the business rescue plan is approved and the valuations of the properties are completed.
The company also released an operational update that reflects vacancies of 11.8% in the R5.3bn retail portfolio and 26.2% in the R5.9bn office portfolio. The negative reversions on the office portfolio are quite spectacular at -29%.
Government tenants are clearly hard negotiators.
If it was possible to win a FIFA World Cup through scoring economic own goals, South Africa would put any of the big names to shame. We might even be granted a Cricket World Cup as an adjacent prize, just to make sure we eventually get one of those trophies.
These sporting fairy tales are about as likely as Transnet sorting out its rail business or Eskom keeping the lights on. The frustrations are immense, as we are a resource-rich country at a point in the cycle where it should be our turn to shine.
Instead, the only thing shining is my rechargeable light while I write Ghost Bites late at night.
The pain is made clear by Thungela, our coal superstar that is losing out on exporting coal because of poor rail performance by Transnet Fright Rail. A strike in October by Transnet employees certainly didn’t help either. Because South Africa appears to have angered the ancestors, we also had a derailment on the coal corridor in November that took 10 days to clear.
Mitigating actions included a focus on railing higher-grade products to ports and using trucks to supplement that supply. That’s not cheap when the price of diesel is so high. In the final cruel irony, the price of diesel is partly being driven by demand from Eskom.
Truly, it’s a mess.
Against this delightful backdrop, Thungela’s pre-close statement paints a picture for the year ended December 2022 that remains lucrative. As a regular flick of your light switch will no doubt remind you, there is an energy crisis and we aren’t the only country dealing with it.
This crisis comes through in demand and hence the price for export coal, which has increased from $103.82/tonne to $236.11/tonne. You don’t need your calculator to figure out that this is a big jump. Sadly, thanks to Transnet, export saleable production at 12.8Mt is lower than the revised range of 13.0Mt to 13.6Mt issued in August and 15% lower than the 2021 number.
Lower production has a direct impact on costs per tonne, with the FOB cost per export tonne (excluding royalties) expected to be around R955/tonne (4% higher than the revised range issued in August and 21.7% higher than in FY21). Included in this number is a non-cash charge of R85/tonne related to an increase in environment provisions based on closure estimates.
Including royalties, the cost is expected to be R1,106/tonne vs. R812/tonne last year.
Despite this, Thungela is a cash machine of note, boasting a ridiculous net cash position of R19.8 billion on 30 November compared to R8 billion a year ago. It won’t improve in December because of operational disruptions, which shows how costly the strikes and derailments are.
South Africa desperately needs Thungela, with the company expected to pay taxes and royalties of R4 billion this year.
Headline earnings per share (HEPS) is expected to be at least 97% higher than last year, coming in at a minimum of R131 per share. This is a good time to remind you that Anglo gifted this company to the market at a price of R25 per share in June 2021.
With perfect hindsight of course, that was a forward P/E multiple of 0.2x.
Incredible.
Exchange-Listed Companies
Anglo American is to go ahead with a deal first disclosed in June which will see the miner combine its nuGen™ Zero Emissions Haulage Solution (ZEHS) with US specialist engineering company First Mode (the company that partnered with Anglo to develop ZEHS). In addition, Anglo will provide equity funding of US$200 million into First Mode which will accelerate the development and commercialisation of ZEHS. On completion of the transaction, the business will be valued at US$1,5 billion and Anglo American’s stake in First Mode will increase from 10% to a majority shareholding.
Jasco Electronics is in discussions with its major shareholder, Community Holdings No 1 (CIH) with regards to its intention to make a general offer to minorities to acquire the remaining shares in Jasco. The purchase offer per share of 16 cents represents a 4% premium on the 30-day VWAP of Jasco shares on 2 December 2022.
Sabvest Capital has acquired a 39.3% equity interest in Valemount Trading, a manufacturer and distributor of products for the local pet market, from R & K Trust. The equity purchase consideration will be determined in accordance with an earnings and cash/debt formula calculated on 28 February 2023.
The Premier board and its shareholders (Brait) have decided not to proceed with the initial public offer and listing of the company on the JSE due to current unfavourable capital market conditions. Rather, as noted in the pre-listing statement, Titan and RMB will, in specified proportions, acquire the unlisted ordinary shares in Premier from Brait for an aggregated consideration of R3,5 billion by way of a private sale of shares.
The deal between Murray & Roberts and Webuild announced in early November has been terminated. M&R was to dispose of its interest in Clough Australia. In terms of the deal Webuild would inject A$30 million into cash strapped Clough to avoid placing the company under voluntary administration. The implementation of the loan did not take place resulting in Clough being placed into voluntary administration.
Unlisted Companies
Montfort Group, a global commodity trading and related-asset investment company, has entered the local energy market with the acquisition of a 49% stake in New Age Energy, a B-BBEE company focused on the reliable import, export and distribution of safe and high-quality energy products. The new partnership will see Montfort introduce its brand, products and services to the South Africa market.
CodiumX, an IT investment group headquartered in Johannesburg, has acquired a stake in local data analytics company Intellinexus. The deal will help the company achieve its ambitious target of five to 10 times growth over the next two years through organic growth and acquisitions.
Swiss media group Ringier is to acquire almost all outstanding shares in Cape-headquartered Ringier One Africa Media (ROAM) from co-shareholders SEEK, and minority shareholders Jabavu and Ceatonia. The deal strengthens Ringier’s long-term investment in certain digital marketplaces in sub-Saharan Africa
Connect, a UK cloud communications expert has acquired Pivotal Data and illation as it seeks to increase its presence in the South African market. Financial details were undisclosed.
Atlantis Foods, SA’s frozen seafood distribution company, has acquired Snoek Wholesalers in a deal which will scale the company’s operations and revenue. Snoek Wholesalers represents global brands such as Marfrio and Leroy in SA and sources fish from Peru and China for processing.
Host Africa, the Cape-based hosting business leading in Cloud Server solutions in South Africa, has acquired Kenyan hosting company EAC directory. Financial details were not disclosed.
Automation startup Synatic has raised US$2,5 million in a seed extension round to grow its footprint in the US in preparation for a Series A round. The round was led by Allan Gray E-Squared Ventures and UW Venture. Synatic provides complete solutions for the data integration market, offering a low-code/no-coder/your-code solution to simplify the integration of internal and external data sources.
South African venture capital fund management firm Fireball Capital has, alongside a fund advised by the Development Partners International Fund, invested in Ukheshe International, the UK-headquartered fintech enabler.
DealMakers is SA’s M&A publication
www.dealmakerssouthafrica.com
Lighthouse Properties’ offer to shareholders to acquire new Lighthouse shares has closed with the company issuing 7,692,308 new shares at R6.50 per share. The R50 million capital raise will provide the company with additional liquidity primarily for capital expenditure at its shopping centres.
York Timber intends to raise R250 million by way of a partially underwritten renounceable rights offer of 142,857,142 ordinary shares at a price of R1.75 per share. A2 Investment Partners will underwrite between R111 million and R160 million of the offer for a fee of R4,78 million. The proceeds of the offer will be utilised to preserve the timber volumes by procuring more timber externally and will be applied towards capital investment in manufacturing plants.
In terms of the scrip distribution alternative, Datatec will issue 3,171,196 new Datatec shares resulting in a capitalisation of distributable retained profits of R137 million.
Oasis Crescent Property Fund will issue 901,099 new units in terms of its scrip distribution alternative resulting in a capitalisation of distributable retained profits of R21,08 million.
As part of its capital optimisation strategy, Investec Ltd acquired on the open market a further 1,359,287 Investec Plc shares at an average price of 500 pence per share (LSE and BATS Europe) and 1,716,167 Investec Plc shares at an average price of R104.32 per share (JSE). Since October 3rd the company has purchased 12,58 million shares.
Transpaco has announced its intention to repurchase 1,56,000 shares from Samuel Abelheim Holdings at R27.48 per share for an aggregate of R42, 87 million, to be drawn from cash resources. The repurchase, which represents 4.95% of the issued share capital of the company, is a related party transaction and thus requires the approval of shareholders.
A number of companies listed on one of South Africa’s Stock Exchanges have initiated share buyback programmes and each week update shareholders. They are:
Glencore this week repurchased 16,100,000 shares for a total consideration of £89,20 million. The share repurchases form part of the second phase of the company’s existing buy-back programme which is expected to be completed by February 2023.
South32 has this week repurchased a further 1,021,256 shares at an aggregate cost of A$4,09 million.
Prosus and Naspers continued with their open-ended share repurchase programmes. During the period November 28 – Dec 2, a further 5,156,456 Prosus shares were repurchased for an aggregate €315,53 million and a further 850,610 Naspers shares for a total consideration of R2,21 billion.
British American Tobacco repurchased a further 580,373 shares this week for a total of £19,77 million.
Two companies issued profit warnings this week: Marshall Monteagle and Sebata.
Three companies issued or withdrew cautionary notices. The companies were:
Jasco Electronics, Murray & Roberts and Jasco Electronics.
DealMakers is SA’s M&A publication
www.dealmakerssouthafrica.com
DealMakers AFRICA
Australian mining company Askari Metals has entered into a binding agreement to acquire an 80% interest Earth Dimensions Consulting, owner of lithium project EPL 8535 located near the town of Uis in Namibia. In terms of the agreement Askari will pay $1,6 million, payable in AS2 consideration shares at an estimated issue price of A$0.40 plus a Net Smelter Royalty of 1.5% payable by Earth Dimensions.
InfraCo Africa, a UK head officed firm providing funding and expertise to infrastructure projects, has invested US$2 million in Mobility for Africa to scale the business. The Zimbabwe-based electric mobility company delivers affordable, cargo-carrying e-tricycles and solar-powered battery charging solutions to the underserved communities in rural Zimbabwe.
Host Africa, the hosting business leading in Cloud Server solutions in South Africa, has acquired Kenyan hosting company EAC directory. Financial details were not disclosed.
Financial services company Lipa Later has acquired Sky.Garden for an undisclosed sum. Sky.Garden is a mobile first SaaS e-commerce platform for African retailers. The acquisition is in line with Lipa’s aim to build an end-to-end service connecting merchants to customers.
ShEquity, a Mauritius-based impact investment firm has made an undisclosed investment in Owoafara, a Nigerian women-owned financial inclusion startup. Through Owoafara’s digital platform and card services, member businesses are verified and provided with a variety of financial services including credit not normally provided by the banks.
Nigerian proptech startup VENCO has secured US$670,000 in a pre-seed funding round led by Zrosk Investment Management with participation from Voltron Capital, Decimal Point Ventures and Fast Forward fund, among others. The technology platform which provides solutions to enhance living experiences in residential and commercial communities, will use the funds to scale its platform with more features such as credit delivery infrastructure for household spending. VENCO has set its sights on growing its presence in Kenya and expanding into Ghana and South Africa.
East African a fintech startup Watu Credit has received an investment from BluePeak Private Capital, the funds of which will be used to further improve mass-market mobility and promote financial inclusion.
SIDEUP, the Egypt-based logistics platform previously branded as Voo, has raised US$1,2 million in a seed round from investors which include Launch Africa VC, 500 Global, Riyadh Angels and Alex Angels, among others. The funds will be used to scale its presence in Egypt and expand into Saudi Arabia.
OneOrder, the technology enabled supplier and wholesale distributor solutions provider for restaurants, has raised US$3 million in seed funding led by Nclude with participation from A15 and Delivery Hero Ventures. The funding will be used to scale its market share in Egypt with a view to exploring opportunities across the rest of Africa.
Kenyan re-commerce startup Badili has raised US$2,1 million in pre-seed funding. The second-hand phone commerce platform will use the funds raised to scale the business in Kenya and increase its footprint in other markets. Investors participating in the round included, among others, Venture Catalysts, V&R Africa, Grenfell Holdings, SOSV and Artha India Ventures.
Uncover, a Kenyan skincare startup has raised US$1 million in seed funding from FirstCheck Africa, Samata Capital, Future Africa, IgniteXL and angel investors. The funds will be used to grow operations in Kenya with the aim of expanding into Nigeria.
Brito, a Cairo-based startup operating a series of smartly distributed, and fully operated Cloud Kitchens all over Egypt helping international brands to expand their presence and delivery to the Egyptian market, has raised US$1,25 million in a pre-seed round. The startup will use the funds to further develop its technology, grow its delivery fleet and expand its presence.
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